Comments on: Real Home of Genius: Irvine California and the Home Equity Withdrawal Machine. FHA Approaching the Zero Bound.

By: Greg in LA

Greg in LA — Wed, 18 Nov 2009 07:09:00 +0000

Could someone please help!

I just can’t square a certain fact. Real estate prices in Southern California have been going up, at the same time we have record unemployment 12.7% in LA and default rates have been at record highs all year as well.

If any one can shed some light on these facts, please explain it to me I just do not understand.

By: Mike M

Mike M — Tue, 17 Nov 2009 16:20:38 +0000

Where is the area that is called “High Desert” in the first chart?

Thanks again for your hard work.

By: jk2001

jk2001 — Tue, 17 Nov 2009 08:28:12 +0000

While the upper end of FHAs are going to default, what about the lower end? If the rents are comparable to mortgage payments, and the resident is employed, where’s the motivation to walk? Rent money is spent money – it’s better to get a little equity in a declining asset (that’s probably near bottom) than to rent. Realistically, if I bought a tiny place in “the hood” which is kind of where I already live, I could tolerate losing around $20,000 a year in equity.

By: Laura Louzader

Laura Louzader — Sun, 15 Nov 2009 19:06:35 +0000

Illinois has moved up to the number 3 spot in number of foreclosures, only behind California and Nevada. We’re about to repeat your recent history here and the bloodbath is well underway. Turns out that we had exactly the same insanity here-the fraudulent mortgages, the loans massively outsized relative to income, the equity withdrawals. One local mortgage broker stated on his blog that the prices here need to drop another 40% to get back to the Case-Schiller trendline.

Thank you for this blog. You and other astute housing bloggers have saved me tens of thousands dollars. Places I made low ball offers on that were rejected have fallen far under the prices I offered and look to fall more.

By: John Jay

John Jay — Sun, 15 Nov 2009 18:42:18 +0000

Here is my prediction for real estate.
Since the Federal Government will wind up with all the bad mortgages in the USA as Freddie, Fannie, FHA, the banks and Credit Unions all go insolvent, there is a simple solution. Since we have shipped all our industry offshore, destoying the tax base, the Federal Government simply collects whatever rent they can get on all the bad homeloans. That will provide the new revenue stream to finance the government, it is section 8 on steroids. A whole new slew of Federal jobs to collect the rents, do repairs on the houses, provide insurance, etc. As the States all go insolvent the Fed bails them out and pays no local property tax on their holdings as part of that deal. The Fed gets to show all the houses they own as an “asset”, and all the bad debt goes off to a remote hanger at area 51. The privately owned houses slowly wind up in the hands of the Fed as the government institutes “Means Testing” requiring anyone owning property to pay back Social security and Medicare when they die. Oh yeah, and privately held property is still subject to local property taxes. Ditto for Commercial Real Estate. We will become the USSR not with a bang, but a whimper!